The Government's proposed Employment Leave Bill is set to replace the Holidays Act 2003, representing one of the biggest changes to employment leave legislation in more than two decades.
The Bill is currently progressing through Parliament and is expected to take effect in 2028, allowing time for employers and payroll providers to prepare. Until then, employers should continue to comply with the existing Holidays Act.
So, what is changing? The following reflects the Bill as currently proposed and may change before it is enacted.
• Annual leave will accrue in hours rather than being provided as four weeks after 12 months of employment.
• Sick leave will accrue from an employee's first day of employment, rather than becoming available after six months.
• Bereavement leave and family violence leave will be available from day oneof employment, with the ability to take leave in part-days where appropriate.
• A new leave compensation payment (LCP) is proposed for additional and casual hours worked, replacing the accrual of annual and sick leave on those hours.
• A simplified payment methodology aims to replace many of the complex calculations that have challenged employers and payroll providers under the current Holidays Act.
• New rules for determining an "otherwise working day" are intended to provide greater consistency when assessing public holiday and alternative leave entitlements.
• Updated record-keeping requirements will support the new leave framework and help improve payroll compliance.
The proposed reforms are intended to create a leave system that is easier to understand, simpler to administer, and fairer for employees who work variable or irregular hours. While these changes are significant, there is nothing employers need to do immediately. The Bill is still progressing through the legislative process and may change before it becomes law. The bill is anticipated to pass at the end of 2026, but will not come into effect until 2028. The existing Holidays Act obligations remain in place, and businesses should continue to follow the current legislation until any new requirements are confirmed.
The Employment Leave Bill is another reminder that payroll is becoming increasingly complex. If you're spending more time navigating employment legislation than running your business, it may be time to consider outsourcing your payroll. Our team stays on top of legislative change, so you don't have to. Get in touch to find out how Pulse Payroll can support your business
